Revenue falls; governor to revamp budget

With natural gas prices falling, Governor Matt Mead told reporters at the Wyoming Press Association’s winter convention in Laramie Friday that he is taking a look at the budget he submitted, which now has an estimated $22 million shortfall.

Mead said the budget he submitted to the Wyoming Legislature reflects $17 million in cuts. The Joint Appropriations Committee then asked each agency to look at cutting 5 percent to 8 percent.

“I didn’t think that 5 or 8 percent was necessary based on revenue projections, so I asked for 2 percent,” Mead said.

He added that now there are four budgets, his original budget and three alternates with 2 percent, 5 percent and 8 percent cuts. Then came new revenue forecasts. He said he based his budget on $3.45 Mcf (thousand cubic feet) for natural gas, and prices are now at $2.75 Mcf.

“This could mean a reduction of $100 million,” he said. “Because natural gas prices continue to fall we are all taking a look at the budgets, even the budget I proposed.”

He said Wyoming has always and must always make sure it never goes into the hole. He said he left $87 million for the Legislature to spend and $400 million in savings. With the latest revenue projects that $87 million is gone and “we’re now in the hole $22 million.”

Four critical areas

Mead said there are four critical areas that he hopes remain untouched in his budget.

•Highways. Mead’s budget adds $50 million to the $50 million he provided for highways last year. He said while that is a lot of money, the state has not traditionally put general fund money toward highways, and the Wyoming Department of Transportation said the total $100 million is not enough to maintain and repair all of Wyoming’s highways. Mead said additional revenue sources are needed.

In addressing a question from one of the media in the room at Friday’s luncheon, Mead said he did not think there was enough support for an increase in fuel tax even though 52 percent of the tax is paid from out-of-state travelers.

He said there is also not great support for toll roads.

•Local funding. Mead has budgeted $168 million for towns, cities and counties. “There is infrastructure need in nearly every town and county,” Mead said, adding that infrastructure is key to economic development in the state, including fiber optic, roads, sewer, water and landfills.

He said the funding is currently a 70-30 split with the 70 percent being dolled out by the State Loan and Investment Board and 30 percent direct funding. He said he wasn’t set on the percentages but noted “I don’t want the majority of the money going to day-to-day operations. It needs to be spent on building and maintaining infrastructure.”

He said he still supports using 1.5 percent of the severance tax as an earmark including .5 percent for towns and counties but added the legislature is concerned about earmarks.

Mead said he feels the hedonic wage index is the better index to use but adjustments need to be made because “we are not trying to make cuts.”

•Support of the University of Wyoming’s School of Energy.

•School construction. He said there is $400 million for school construction and $100 million for major maintenance. “We can’t build these new schools and not maintain them,” he said.

In answering other questions, the governor said:

•He supports only one four-year university and wants the community colleges and UW working in partnership.

•He said the problem with the Bureau of Land Management Resource Management Plan for the Big Horn Basin was that it failed to recognize areas for enhanced oil recovery but as a result of the governor’s office intervening, the BLM has reconsidered and “we have moved in the right direction.”

The BLM is at fault for not recognizing the economic impact of enhanced oil recovery, but the state is at fault, too, for not having an energy policy that states enhanced oil recovery is important, Mead said.

An energy policy, he said, would be good for the environment and good for energy development by allowing the state to be proactive in development.